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The Text of the Dodd-Frank Act
International Association of Risk and Compliance Professionals (IARCP)
 
Dodd Frank Act Section 929P
SEC. 929P. STRENGTHENING ENFORCEMENT BY THE COMMISSION.

(a) AUTHORITY TO IMPOSE CIVIL PENALTIES IN CEASE AND DESIST PROCEEDINGS.—

(1) UNDER THE SECURITIES ACT OF 1933
.—Section 8A of the Securities Act of 1933 (15 U.S.C. 77h–1) is amended by adding at the end the following new subsection:

‘‘(g) AUTHORITY TO IMPOSE MONEY PENALTIES.—

‘‘(1) GROUNDS.
—In any cease-and-desist proceeding under subsection (a), the Commission may impose a civil penalty on a person if the Commission finds, on the record, after notice and opportunity for hearing, that—

‘‘(A) such person—

‘‘(i) is violating or has violated any provision of this title, or any rule or regulation issued under this title; or

‘‘(ii) is or was a cause of the violation of any provision of this title, or any rule or regulation thereunder; and

‘‘(B) such penalty is in the public interest.

‘‘(2) MAXIMUM AMOUNT OF PENALTY.—

‘‘(A) FIRST TIER.
—The maximum amount of a penalty for each act or omission described in paragraph (1) shall be $7,500 for a natural person or $75,000 for any other person.

‘‘(B) SECOND TIER.—Notwithstanding subparagraph (A), the maximum amount of penalty for each such act or omission shall be $75,000 for a natural person or $375,000 for any other person, if the act or omission described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.

‘‘(C) THIRD TIER.—Notwithstanding subparagraphs (A) and (B), the maximum amount of penalty for each such act or omission shall be $150,000 for a natural person or $725,000 for any other person, if—‘‘(i) the act or omission described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement; and

‘‘(ii) such act or omission directly or indirectly resulted in—

‘‘(I) substantial losses or created a significant risk of substantial losses to other persons; or

‘‘(II) substantial pecuniary gain to the person who committed the act or omission.

‘‘(3) EVIDENCE CONCERNING ABILITY TO PAY.—In any proceeding in which the Commission may impose a penalty under this section, a respondent may present evidence of the ability of the respondent to pay such penalty. The Commission may, in its discretion, consider such evidence in determining whether such penalty is in the public interest.

Such evidence may relate to the extent of the ability of the respondent to continue in business and the collectability of a penalty, taking into account any other claims of the United States or third parties upon the assets of the respondent and the amount of the assets of the respondent.’’.

(2) UNDER THE SECURITIES EXCHANGE ACT OF 1934.—Section 21B(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78u– 2(a)) is amended—

(A) by striking the matter following paragraph (4);

(B) in the matter preceding paragraph (1), by inserting after ‘‘opportunity for hearing,’’ the following: ‘‘that such penalty is in the public interest and’’;

(C) by redesignating paragraphs (1) through (4) as subparagraphs (A) through (D), respectively, and adjusting the margins accordingly;

(D) by striking ‘‘In any proceeding’’ and inserting the following:

‘‘(1) IN GENERAL.—In any proceeding’’; and

(E) by adding at the end the following:

‘‘(2) CEASE-AND-DESIST PROCEEDINGS.—In any proceeding instituted under section 21C against any person, the Commission may impose a civil penalty, if the Commission finds, on the record after notice and opportunity for hearing, that such person—

‘‘(A) is violating or has violated any provision of this title, or any rule or regulation issued under this title; or

‘‘(B) is or was a cause of the violation of any provision of this title, or any rule or regulation issued under this title.’’.

(3) UNDER THE INVESTMENT COMPANY ACT OF 1940.—Section 9(d)(1) of the Investment Company Act of 1940 (15 U.S.C. 80a–9(d)(1)) is amended—

(A) by striking the matter following subparagraph (C);

(B) in the matter preceding subparagraph (A), by inserting after ‘‘opportunity for hearing,’’ the following: ‘‘that such penalty is in the public interest, and’’;

(C) by redesignating subparagraphs (A) through (C) as clauses (i) through (iii), respectively, and adjusting the margins accordingly;

(D) by striking ‘‘In any proceeding’’ and inserting the following:‘‘(A) IN GENERAL.—In any proceeding’’; and

(E) by adding at the end the following:

‘‘(B) CEASE-AND-DESIST PROCEEDINGS.—In any proceeding instituted pursuant to subsection (f) against any person, the Commission may impose a civil penalty if the Commission finds, on the record, after notice and opportunity for hearing, that such person—

‘‘(i) is violating or has violated any provision of this title, or any rule or regulation issued under this title; or

‘‘(ii) is or was a cause of the violation of any provision of this title, or any rule or regulation issued under this title.’’.

(4) UNDER THE INVESTMENT ADVISERS ACT OF 1940.—Section 203(i)(1) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–3(i)(1)) is amended—

(A) by striking the matter following subparagraph (D);

(B) in the matter preceding subparagraph (A), by inserting after ‘‘opportunity for hearing,’’ the following:

‘‘that such penalty is in the public interest and’’;

(C) by redesignating subparagraphs (A) through (D) as clauses (i) through (iv), respectively, and adjusting the margins accordingly;

(D) by striking ‘‘In any proceeding’’ and inserting the following:

‘‘(A) IN GENERAL.—In any proceeding’’; and (E) by adding at the end the following new subparagraph:

‘‘(B) CEASE-AND-DESIST PROCEEDINGS.—In any proceeding instituted pursuant to subsection (k) against any person, the Commission may impose a civil penalty if the Commission finds, on the record, after notice and opportunity for hearing, that such person—

‘‘(i) is violating or has violated any provision of this title, or any rule or regulation issued under this title; or

‘‘(ii) is or was a cause of the violation of any provision of this title, or any rule or regulation issued under this title.’’.

(b) EXTRATERRITORIAL JURISDICTION OF THE ANTIFRAUD PROVISIONS OF THE FEDERAL SECURITIES LAWS.—

(1) UNDER THE SECURITIES ACT OF 1933.—
Section 22 of the Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by adding at the end the following new subsection:

‘‘(c) EXTRATERRITORIAL JURISDICTION.—The district courts of the United States and the United States courts of any Territory shall have jurisdiction of an action or proceeding brought or instituted by the Commission or the United States alleging a violation of section 17(a) involving—

‘‘(1) conduct within the United States that constitutes significant steps in furtherance of the violation, even if the securities transaction occurs outside the United States and involves only foreign investors; or

‘‘(2) conduct occurring outside the United States that has a foreseeable substantial effect within the United States.’’.

(2) UNDER THE SECURITIES EXCHANGE ACT OF 1934.—Section 27 of the Securities Exchange Act of 1934 (15 U.S.C. 78aa) is amended—

(A) by striking ‘‘The district’’ and inserting the following:

‘‘(a) IN GENERAL.—The district’’; and

(B) by adding at the end the following new subsection:

‘‘(b) EXTRATERRITORIAL JURISDICTION.—The district courts of the United States and the United States courts of any Territory shall have jurisdiction of an action or proceeding brought or instituted by the Commission or the United States alleging a violation of the antifraud provisions of this title involving—

‘‘(1) conduct within the United States that constitutes significant steps in furtherance of the violation, even if the securities transaction occurs outside the United States and involves only foreign investors; or

‘‘(2) conduct occurring outside the United States that has a foreseeable substantial effect within the United States.’’.

(3) UNDER THE INVESTMENT ADVISERS ACT OF 1940.—Section 214 of the Investment Advisers Act of 1940 (15 U.S.C. 80b– 14) is amended—

(A) by striking ‘‘The district’’ and inserting the following:

‘‘(a) IN GENERAL.—The district’’; and (B) by adding at the end the following new subsection:

‘‘(b) EXTRATERRITORIAL JURISDICTION.—The district courts of the United States and the United States courts of any Territory shall have jurisdiction of an action or proceeding brought or instituted by the Commission or the United States alleging a violation of section 206 involving—

‘‘(1) conduct within the United States that constitutes significant steps in furtherance of the violation, even if the violation is committed by a foreign adviser and involves only foreign investors; or

‘‘(2) conduct occurring outside the United States that has a foreseeable substantial effect within the United States.’’.

(c) CONTROL PERSON LIABILITY UNDER THE SECURITIES EXCHANGE ACT OF 1934.—Section 20(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78t(a)) is amended by inserting after ‘‘controlled person is liable’’ the following: ‘‘(including to the Commission in any action brought under paragraph (1) or (3) of section 21(d))’’.
 


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